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The Price of Civilisation – Jeffrey Sachs

This is an excellent book by someone with the pedigree to be taken seriously. He is currently the Director of the Earth Institute and Professor of Health Policy and Management at Columbia University. He has been named by Time magazine as one of the 100 most influential leaders in the world.

The book provides a critique of the economic crisis facing the USA at the moment. He sees this crisis having a moral root in “the decline of civic virtue amongst America’s political and economic elite.” Sachs documents the declining prosperity of middle America and the scale of growing inequality with a wealth of statistics. At a time when one in eight Americans depends on food stamps the wealthiest one percent of American households enjoy a higher total net worth than the bottom 90 percent. In relation to incomes the top one percent of earners receive more than the bottom fifty percent.

Sachs provides a critique of the demonisation of taxation and big government by successive administrations. This radical liberal position meant that other key issues were neglected specifically the rise of the internet; of a new economically dynamic Asia and an evolving ecological crisis. The book charts the shift in US policy over the course of the 20th Century away from a belief in the potential for positive intervention by the state as evidenced by the New Deal in the 1930’s and the War on Poverty in the 1960’s to a situation where Washington was seen as the enemy. Cutting back regulation, privatising public services, cutting taxes. These were the new orthodoxy pursued by governments of both Democratic and Republican persuasion.

Sachs refutes some some of the key assertions of the extreme liberal consensus about, for example, the negative effect of high taxation. He points out that in the period 1955-1970, the top marginal tax rate in the US was 82% and GDP growth was 3.6% whilst in the period 1981-2010 the top marginal tax rate was 39% and the growth in GDP was 2.8%. He claims that the causes of the relative decline in the position of the US has been more to do with the process of globalisation than the processes of allegedy big government.

The book describes the growing polarisation of opinion in the states between the Sunbelt and Snowbelt. Sachs points to the irony of the fact that the states most opposed to big government are, in fact, net recipients of Federal spending.

Sachs, identifies a number of forces which have undermined the effectiveness of the political system. Weak national parties, the corporate financing of the political process, a process of globalisation which has undermined the power of labour groups. All these have led to the rise in power of what Sachs calls the corporatocracy unchallenged by either of the two main parties. Challenge by the citizenry is undermined by the advent of the media saturated society where people spend their working days tied to a computer screen and then come home to spend their leisure time glued to a range of leisure screens creating a “…technology-rich, advertising-fed, knowledge poor society.”

Having analysed in some details of the problems of contemporary America Sachs goes on to provide a programme of change to renew American democracy and and redistribute wealth to pay for civilisation. It is not a revolutionary programme of confiscation, rather he proposes that overall tax rates in the states be raised so that they are comparable with overall tax rates in Europe. This increase in taxation should be accompanied by a shift of resource away from the federal government towards the individual states to support increase investment in education, early childhood development, infrastructure and a range of other headings to improve productivity.

In parallel with the fiscal reforms he proposes a series of reforms of government to overcome the problem of “corporatocracy” which he sees as the capture of the state by big business. His proposals here would make some blanch, things like, public funding for political parties; free media time allocated according to criteria other than who can pay for most; statutes to prevent Federal employees from taking lucrative jobs in the private sector for a minimum of three years after they leave office and banning campaign contributions from lobbying firms. The aim being to transform America from being the best democracy that money can buy to a political system with its roots in a thriving and diverse civil society.

Sachs might be seen, in some quarters, as a hopeless idealist however it is clear that the US has a number of long term issues which at some point are likely to force radical change. Its political system is paralysed by a polarity, the vehemence of which is incredible given the substantive areas of agreement. Its inequitable distribution of wealth which is getting worse and worse. The state of its public infrastructure. As critique and proposal Sachs’ book is well worth a read.

The Price of Civilisation – Economics and Ethics After the Fall. J Sachs. Published by Bodley Head 2011.